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Jun 1, 2009
by Judi Perkins
"We had seen a trend for lower quality commodities with higher margins, and decided to do it differently by providing high quality goods while still maintaining the higher margin," said Christensen, "And we knew consumers were willing to pay for that."
The company was developing wares based on contract agreements, as well as providing products under their own name. Either way, they began breaking retailers' sales records. It was then, with five companies, three offices and so many products that it became difficult to manage them. Christensen decided to retain the most popular merchandise and had the most potential.
He moved all the developing products into a new company with a new philosophy that would receive 100 percent of his focus: Simple Products. "We would simplify the merchandise and the display methods and focus only on those that sold very well." Their resulting success has given them a reputation and customer base far greater than they anticipated.
Now, after years of perfecting product development, distribution channels and private label programs, they are bringing these same advantages to the smaller buyers. "We have been able to get the minimum private label order quantities of some goods down as low as 100," Christensen said. Predictably, the lower amounts are more expensive because they price by quantity, but it varies from item to item. Said Christensen, "The pricing matrix we use with smaller quantities makes us the best price out there. Although for the smaller numbers the product costs add up, orders over 1,000 pieces receive similar pricing to the big boys."
Additionally, because of their well developed distribution channels, they are, according to Christensen, in "Pretty much every category: convenience, gift, mass retailers, dollar stores and grocery chains. We are across the board, including niche markets. Now, we are moving into the mom and pop stores and giving them private label merchandise at a better price, or they can take our product line as it is."
Their website is being modified into a wholesale site. "We are a manufacturer," said Christensen. "We want to put the products on there and have our customers use the website better than they are able to now. It will become an informational site with a shopping cart, where retailers create an account to see the prices and information. We will launch it by September."
In the meantime, Simple Products produces a catalog once each year and have sales reps throughout the country. Not only will they send samples, but they will provide free freight on their low minimum order of one case. "We have some customers who prefer to buy less than a case and pay freight. But, our case packs are small, because they are designed for the smaller customer," said Christensen.
Simple Products also guarantees their products. Their call center regularly phones customers to make sure the store is stocked with merchandise that is selling well. If not, they take it back and supply the store with something else. "Our employees know the products," said Christensen. "Our customers love that."
The success of their products is based on a simple philosophy: take a normal product and add a twist to it. "Take lip balm, for example, which is available anywhere you go," said Christensen. "Ours is flavored with oil, not a water based scent or flavoring, so it is long lasting, and we have some pretty strong flavors."
That added twist also niches the product. The lip balm is primarily for tweens and young adults. Their best selling line, however, is called Simply Sheila, a line of flashlights designed for women. Christensen noted they were the first company to do this. "They are almost fashion accessories now. Women put them in their purses and their cars. Our prices are a little higher, but we have a near zero defect rate when 30 to 40 percent is the norm. Every one of our lights is checked before it goes out."
One of the reasons they offer free freight is to provide an incentive for the retailer to try the item and see how well it sells. In line with their philosophy of offering higher quality goods with a high margin, they want the retailer to see that the consumer will, in fact, pay a higher price for a better product.
"A lot of people are under the mindset that the cheaper the price, the better the product will sell, so stores often tell us the price is too high," said Christensen. "I give them a display of flashlights and tell them to put it next to theirs, promising them that if it does not sell, we will pay to ship it back. We outsell the other ten to one."
Last year, Christensen said Simple Products saw 200 percent growth, and this year they expect 400 percent. "The reason we are so successful is that we are focusing more on the smaller accounts. We are providing them the services and support that the bigger accounts demand. There is a wealth of accounts out there, and we love working with these guys." Simple Products enjoys helping them develop their business. "If they grow, we grow," he said.
Also in keeping with the simplification theory are the packaging and displays. All products come countertop ready, which makes the displays free. "We can put more merchandise and more dollars in a square foot of counter space, because we eliminate the packaging," Christensen said.
Their biggest challenge is getting customers to understand that the consumer is interested in a quality and they are willing to pay for it. "All of our healthcare products are made in the U.S., and all of our quality assurance is done here," said Christensen. "The majority of our products are made in the USA."
After consolidating their product lines, they have about 200 sku's, although the plan is to reach 500. "We stick with a core product line that people are interested in, tailor it to certain niches, and launch it. We are not the cheapest, but we are the best quality without sacrificing our customers' profit potential. As a rule we try to get our stores 40 to 50 percent gross margin," he said.
Christensen said Simple Products has always been known as a great company to work with that has quality product they stand behind. "I know these are clichés, but occasionally you will find there is a reason those clichés exist."
MINIMUM ORDER: 1 case. For private label items, it depends on the item.
For more information, contact:
Simple Products Corp
138 East 12300 South Ste C-165
Draper, UT 84020
Toll Free: 866-553-8886
Topic: Company Profiles
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